10 Steps to Prevent Online Auction Fraud

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From luxury cars to Disney characters, you can find almost
anything you want by visiting online auction sites.

But if you don't take the necessary precautions, your money could
be going, going, gone, according to Ina Steiner, editor of
AuctionBytes.com, a trade publication for online merchants.

Steiner offers these 10 tips to help prevent online auction
fraud:

Stay away from wire transfers, Western Union,
etc. "The scam artists will come up with a good reason
why they're overseas and ask you to send them the money via
wire transfer," Steiner said.

But that's never a good idea, because you have absolutely zero
protection in case the deal goes south.

Beware of escrow scams. "If the seller says,
"Let's use escrow," the red flag should go up," Steiner said.
"You should be really cautious because the seller will pretend to
use an eBay escrow service or an Amazon escrow service. They have
it all set up so you think you're sending the money to an eBay or
Amazon escrow service — but neither eBay nor Amazon has an escrow
service."

Scammers will set up a
domain name such as www.ebay-escrow.com and send emails from
that account, but there is no such service. However, escrow is a
good service to use if it's legitimate.

If it seems too good to be true, it probably is.
"If you're really concerned that something is a scam, you
probably already know that there’s something wrong," Steiner
said.

Listen to that voice in your head, and proceed with caution.

Read the fine print on payment processing sites
such as PayPal or Google, because they don't always cover
everything. A credit
card is a good way to make an online purchase because it
offers a lot of protection.

Remember that an auction site like eBay is not the
seller. "If a transaction goes wrong, the auction site
will not refund your money," she said.

Sites like eBay are merely the venues — you are buying from a
third party.

If you’re new to bidding at online auction sites, start
small. "You don't want to bid on a car your first time
out," Steiner said.

If you have friends who are more experienced than you at bidding
on eBay, run the item by them.

Don’t ever purchase anything outside of eBay or any other
auction site. "It's a big red flag when a seller says he
wants to take the transaction offline," she said. "There's no
reason why a seller on eBay or any other auction would need to
complete the transaction outside of eBay."

Many scammers will list something on eBay that they really don't
have in their possession. Then when the consumer places a bid on
it, the seller will say he wants to take it offline because it
will save him money on eBay fees and he can sell it to you for a
lower price.

The scammers do that because then they can communicate with the
buyers directly and persuade them to send the money via wire
transfer or Western Union.

Be aware of account takeovers. "For example, a
seller has built up a great reputation and he's a very honest
seller, but a scammer has hacked into his account and taken it
over," Steiner said.

"Then the scammer will put in the description of the auction,
'Email me for a discount,'" she explained. "The scammer's email
address will be something like seller@hotmail.com. So the shopper
will send an email to the seller. The seller will then say to the
shopper, 'Look at my reputation. I have a great reputation.'"

So you send the money to this scam artist, and the real seller
has no idea the description of the item in the auction listing
has been changed.

The scammer might also start listing many big-ticket items, such
as 50 digital cameras, using the legitimate seller’s account.
However, the scammer doesn't have those 50 cameras.

If a seller has been selling items one-by-one in a particular
category, and then all of a sudden he's listing 50 cameras or
Nintendo Wiis, that's a red flag because it means the account may
have been taken over.

"And eBay will not protect you in that case," Steiner said.

If you're thinking of bidding on an expensive item,
contact the seller before you place a bid and see how responsive
he is. This won't always establish the seller's bona
fides, but you may be able to knock down the price a bit.

If you win an item on eBay, be sure the PayPal account
has the same e-mail address as the eBay account.
"Sometimes scammers will enlist the help of unsuspecting people —
called mules — via online wanted ads to defraud people on eBay or
other auction sites," Steiner said.

For instance, the scammer will say to the mule, "I'm a
distributor in Europe or Asia and I can't get a PayPal account in
the U.S. but we have orders coming in from the U.S. that we're
going to ship and we need you to do the payment processing for
us. So we’ll hire you and when we get an order, the customer will
send the money to your PayPal account and you take out your
salary and then forward the rest to us."

Steiner said that's another really big red flag. It helps the
scammers defraud people on auction sites.